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Making Sense of the Jobless Claims Numbers

The stock market responded strongly to weekly jobless data that showed that those filing for continuing unemployment benefits had dropped to their lowest level since December 2008.

But many economists and labor advocates say the numbers are painting a decidedly bleaker picture.

The Labor Department could provide no explanation as to why the number of people claiming continuing regular state unemployment benefits had dropped by 255,000, to 4.46 million, on a seasonally adjusted basis in the week ended May 29.

It was unlikely, as some analysts speculated, that those claimants had found jobs. The combined number of people on extended and emergency benefits — 5.39 million in the week ended May 22 — was actually higher than the 5.32 million a week earlier.

“Increasingly, those who are unemployed have been unemployed for six months or more,” said Andrew Stettner, deputy director of the National Employment Law Project. “If you’re out for more than six months, you’re not on regular benefits. Long-term unemployment is now the norm.”

Indeed, in last Friday’s complicated jobs report — indicating weak private sector hiring in May — the number of people who had been unemployed for 27 weeks or longer remained stuck at 6.8 million.

The Labor Department reported Thursday that initial claims for unemployment benefits in the week ended June 5 were 456,000 on a seasonally adjusted basis, down 3,000 from revised figures of a week earlier. The four-week moving average of 463,000 was up 2,500 from the prior week.

Although those initial claims are down from the close to 600,000-a-week level of a year ago, most economists agree that claims of 450,000 or above are too high to suggest a strong recovery in hiring.

Many economists were disappointed by the weaker than expected private sector hiring numbers last Friday, given some stronger numbers in March and April. Joshua Shapiro, chief economist for MFR, said that those earlier numbers might simply have been exaggerated.

Mr. Shapiro thinks that something called the birth/death adjustment, which the Labor Department uses to estimate the number of jobs added or subtracted because of new business formations or collapses, may be skewed too high.

“With credit very tight and conditions being what they’ve been,” said Mr. Shapiro, “new business formation is probably weaker than what it has historically been.”

He added: “I think people got themselves a little too excited on the upside about things, and now they’re reassessing a bit. People just didn’t take into account how much of the economic turnaround or whatever you want to call it was just a function of fiscal stimulus and government support, which is now beginning to fade.”

That said, there are still optimists out there. Bernard Baumohl, chief global economist at the Economic Outlook Group in New Jersey, who has been bullish on the economy for several months now, said that part of the reason that unemployment claims might be high is that small- and medium-size businesses are still laying people off while bigger companies are starting to hire again.

He said he expected small- and medium-size businesses to start hiring soon. Unemployment claims, he said, should “get into the 300,000 range by the end of this year and into 2011.”

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Economics doesn't have to be complicated. It is the study of our lives — our jobs, our homes, our families and the little decisions we face every day. Here at Economix, journalists and economists analyze the news and use economics as a framework for thinking about the world. We welcome feedback, at economix@nytimes.com.